Income recognition for a contractor. On March 15, Year 1, Bush Construction Company contracted to build a shopping center at a contract price of \(\$ 120\) million. The schedule of expected and actual cash collections and contract costs is as follows:

a. Calculate the amount of revenue, expense, and net income for each of the four years under the following revenue recognition methods:
(1) Percentage-of-completion method (2) Completed contract method (3) Installment method (4) Cost-recovery-first method

b. Which method do you believe provides the best measure of Bush Construction Company's performance under the contract? Why?

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Year 1 2 3 4 Cash Collections from Customers $ 24,000,000 30,000,000 30,000,000 Estimated and Actual Cost Incurred $ 20,000,000 30,000,000 35,000,000 36,000,000 15,000,000 $120,000,000 $100,000,000